National Bank Financial Markets continues to remain bullish on Canadian e-commerce company Shopify (Shopify Stock Quote, Chart NYSE:SHOP), with analyst Richard Tse coming away from the company’s Shopify Unite 2019 annual partner conference seeing SHOP making a full-court press when it comes to growth initiatives.
On Wednesday, Tse reiterated his “Outperform” stock rating but raised his target from $270.00 to $350.00.
Tse’s update to clients focused on three takeaways from Shopify Unite. First, he says that Shopify’s just-announced Fulfillment Network, a logistics platform for small and medium-sized businesses, could potentially be game changing.
“In our view, with shipping being one of the key variables to consumer purchasing decisions –we see that driving conversion for Shopify’s merchants and increased take rate via a per shipment fee plus monthly storage fee. Bottom line, while the SFN is a few years out to scale – it is a potential game changer to driving incremental revenue,” says Tse.
Second, Shopify announced new POS capabilities, with Tse pointing to key features of the new POS App, and, third, Tse wrote about Shopify Plus, which he sees as giving SHOP the potential to displace some of the world’s largest enterprise application vendors as more large brands move over to Shopify.
“In our view, we see the incremental growth initiatives as having the potential to drive an acceleration in revenue growth which arguably supports the target valuation. We continue to believe Shopify is early in this rapidly growing e-commerce market. Like other disruptive leaders, we believe the upside in the stock comes from the underlying fundamental growth as we look beyond the short term,” says Tse.
The analyst thinks SHOP will generate fiscal 2019 revenue and EBITDA of $1.509 billion and $38 million, respectively, and fiscal 2020 revenue and EBITDA of $1.992 billion and $114 million, respectively. His $350.00 target price represents a projected 12-month return of seven per cent at the time of publication. (All figures in US dollars.)